Armand Hammer's Maze of Skulduggery

Published: October 14, 1996

(Page 2 of 2)

In a self-taped telephone conversation more than six years later, he told one of his lawyers that the Goya had been bought by the Knoedler Gallery, which he owned, for $60,000 from an heir of Marshall Field, the Chicago department store magnate. The painting was then sold through a Liechtenstein entity, Jovest, to the Armand Hammer Foundation for $160,000, generating a $100,000 profit, an evident violation of Internal Revenue Service tax rules against self-dealing.

Along with the Goya, Hammer carried an attache case with $100,000 cash, presumably the kitty, to a meeting with Ms. Furtseva, the Epstein book says, stopping short of stating that the Culture Minister was bribed. Pursued in the Soviet Union by allegations of corruption, Ms. Furtseva died in 1974.

Hammer made another high-profile gift to the Soviet Union. Days after presenting the Goya, he gave the Government two letters written by Lenin, which his foundation records say he had bought from a New York gallery for $128,000.

Samuel Pisar, an international lawyer who accompanied Hammer and his wife to Moscow, said in a telephone interview from his home in Paris that he had no knowledge of any cash briefcase or other manipulations involving the Goya but recalled vividly the tears in the eyes of the Soviet President, Leonid Brezhnev, as he accepted the Lenin letters.

But there was more to the tale, material unearthed after the book's completion suggests. In late 1978, as Occidental fought a fierce battle to acquire the Mead Corporation in an unfriendly takeover, an estranged associate of Hammer's told Mead lawyers of a startling episode he said he had witnessed.

The informant, David Karr, an admitted Soviet agent turned international businessman, claimed that prior to the presentation of the Lenin letters he was summoned one night in 1972 to room 2001 of the National Hotel in Moscow to find Hammer in his pajamas, in tears and on his knees, pleading with two K.G.B. agents not to arrest him for bribery and for smuggling Lenin treasures.

Stanley Pottinger, one of the lawyers for Mead and an assistant United States attorney general from 1973 to 1977, recalled that Karr said that Hammer was let off the hook after agreeing to return a cache of Lenin memorabilia and to donate other treasures. Mr. Pottinger, now a best-selling novelist, quoted Karr as hinting of more damaging information that Karr called ''an atom bomb.''

A second Mead lawyer, Armistead W. Gilliam of Dayton, Ohio, confirmed Mr. Pottinger's account. He said that Karr had further told them that when Hammer wanted to bribe Soviet officials involved in the awarding of mineral concessions, he invited them to his gallery in Switzerland and had them pick out a painting to buy for themselves, after which a buyer would materialize offering to repurchase it an inflated price, thus providing them with a windfall profit.

Robert E. Juceam, a lawyer for Hammer at the time, who is on tape discussing the case with his client, said in an interview that Hammer had derided the story of the hotel room raid as untrue but acknowledged that he had been confronted by Soviet officials upset over his receipt of Lenin letters.

Within days of learning of the Karr disclosures, Hammer dropped his takeover bid of Meade. Seven months later, in July 1979, hours after returning from a trip to Moscow, Karr was found dead in suspicious circumstances in his Paris hotel room.

The full extent of Hammer's activities in the Soviet Union may never be determined, but there are those who say now that Russian treasures routinely made their way to the United States on his private jet. Joan Weiss, a niece and the heir of Frances Hammer, whose independent fortune Hammer is alleged in lawsuits to have sunk into his enterprises, said the couple often returned with antiques, which Hammer then hid.

''I knew he was smuggling things out,'' Ms. Weiss said in a telephone interview from California. ''I saw the stuff coming into the house.''